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RESEARCH TOOLS FOR BUSINESS DECISION MAKING

INTERNAL ASSESSMENT TEST NO.1

ANSWERS

PART-A

1. (d) varies between +1 or -1.

2. (a) positive correlation.

3. (b) scatter diagram.

4. (b) regression.

5. (a) dependent variable.

PART-B

7.

calculate the regression equations of X ON Y and Y ON X from following data

X 1 2 3 4 5
Y 2 5 3 8 7

CALCULATION OF REGRESSION EQUATIONS

X Y X2 Y2 XY
1 2 1 4 2
2 5 4 25 10
3 3 9 9 9
4 8 16 64 32
5 7 25 49 35
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∑X= 15 ∑Y= 25 ∑ x 2= 55 ∑ y 2= 151 ∑XY= 88

∑ (Y-Yc) ^2 should be minimum or ∑ (Y – a – bX) ^2 should be minimum (since Yc=a+bX)

S=∑(Y-a-bX) ^2

So, differentiating partially with respect to a and b:

∂ S ÷ ∂ a=∑ ( Y −a−bX )(−1 )=0

∂ S ÷ ∂b=∑(Y-a-bX) (-X) =0

Or, ∑(Y-a-bX) =0, ∑(Y-a-bX) X =0

Regression equation of X on Y is given by

X= a + bY

The normal equations are:

∑X= Na +b∑ Y

∑XY= a∑ Y+ b ∑Y 2

Substituting the values, we get

15=5a+25b …………….(i)

88=25a+151b………….(ii)

Solving (i) and (ii), we get

a=0.5 and b=0.5

Hence the required regression equation of X on Y is given by

X= 0.5+0.5Y

Regression equations of Y on X is: Y= a+bX

The normal equations are:

∑Y= Na+b∑X

∑XY= a∑ X + b ∑ X 2

Substituting the values, we get

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25= 5a+15b…………(iii)

88=15a+55b……… (iv)

Solving (iii) and (iv), we get

A=1.10 and b= 1.3

Hence the required regression equation of Y on X is given by

Y= 1.10+ 1.30X

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BC0190002